Masterclass on Licensing-in technology in the Food Industry
Key Messages
" Recognise the value of your brands and patents-protect these intangible assets.
" Licensing-in cuts R&D time and cost, speed to market is a key benefit.
" New product development can be enhanced by tapping into new and cutting edge technology, already successfully developed and available from other companies.
" The Licensing option requires explicit legal contracts covering the control and management of intellectual property, as well as addressing exit options.
" Licensed-in technology is often best used to complement rather than replace internal R&D.
" US food companies that are serving only the North American market can be a rich source of new food products for the EU market.
" Assistance with all aspects of licensing is available from Enterprise Ireland's TechSearch service www.techsearch.ie
Background on Masterclass
Enterprise Ireland's survey (2006) on licensing-in in the Irish food industry showed that while one-third of companies are currently using licensing, over half expect to be using it within the next 2 years as a source of new products and technologies. The Masterclass was designed to bring together a cross section of food companies to share their experience and practices in licensing technology and protecting their intellectual assets.
The companies participating in the event ranged from global organisations to Irish food multinationals through to local SMEs and universities. Opening the event Mr Mike Feeney, Executive Director of Food and Retail Consumer Markets at Enterprise Ireland noted that the large attendance numbers demonstrated the level of interest in licensing technology within the Irish food industry.
The Defence of the Nestle brand
Ms Paula Nelson, General Counsel for Intellectual Property at Nestlé SA, gave a presentation outlining the value which Nestlé places on its intellectual assets and the operational lengths which the company goes to in protecting their brands and trademarks.
One of Paula's first projects was the restructuring of Nestlé's legal departments. She explained "it was essential that the lawyers involved in each brand became part of the business teams locally. Ultimately I organised each team so that I had one patent lawyer and one trademark lawyer in each area of the business" With 6365 trademarks and 9500 patents, the need for effective management of the IP portfolio is clear.
Nestlé recognises that although IP is not a tangible asset on the Balance Sheet, it represents a significant portion of the market value of the business; as such it is a highly valuable element of the business.
However simply recognising the value of IP is not enough, businesses need to dedicate time, money and other resources to legally protecting it and defending it against competitors and criminals. Nestlé have an absolute policy that they always prosecute unauthorised use of their IP rights.
The Essence of IP for Yoplait
Mr Joe Collum, Marketing Director for Consumer Foods at Glanbia plc, acknowledged that Glanbia is increasingly licensing technology in from external sources to complement its in-house R&D and to increase the "speed to market" for new products.
Joe outlined the case of Yoplait Essence, a range developed by Glanbia and aimed at health conscious consumers. "We sought to marry the benefits of a dairy shot with an ingredient akin to a vitamin pill or supplement". In this instance the company licensed-in an active ingredient for "the healthy heart" from an external source for use in Yoplait Essence. This saved €250,000 and nine months of R&D time that would have had to be dedicated to this project. As Joe explains "Licensing increases the pace of innovation."
However Joe warns that Licence Agreements need to be thorough in order to keep control of Intellectual Property. He advised other companies to consider issues such as, rollover periods, buy out clauses, patent ownership and technical support when negotiating licence agreements. With regards to patents, clarity on ownership is essential. Joe pointed out that buying technology that does not have the necessary proprietary regularity approval is "like buying a site without planning permission" i.e. potentially worthless.
All in All Licensing works
Mr Daniel Hickey, MD of AllinAll Ingredients, presented on licensing-in technology from the perspective of an Irish SME. Daniel explained that whilst AllinAll have a team of scientists continually developing new products, the path to registering a patent is long and arduous. Daniel noted "the patent which we registered in 2005 began development back in 2001!"
Having experience in licensing-in technology, Daniel advised companies to research new technologies thoroughly and look for innovations that "will enable your company to bring something new to the market". It's essential that the end result of licensing adds value to the business.
Daniel also stressed that IP needs to be suitably defended "Just as good fences make good neighbours, so too Licensed IP relies on legal protections and defensive actions if it is to be of real value". Any costs which will be incurred in ensuring this protection must be accounted for in order to assess the commercial attractiveness of the licensed IP.
Technology Transfer: The Golden Egg
Ms Laura Treanor, Quality Manager at Shalvey Poultry ltd, had a slightly different experience of using external sources for technology. She explained 'Shalvey Poultry took part in an Enterprise Ireland mission to the US which ultimately resulted in the company gaining access to one of America's largest poultry producers, Perdue Farms". Shalvey Poultry were thus able to access new technologies and products that were previously unknown to them.
The technical knowledge garnered by Shalvey during their informal meetings with Perdue Farms allowed the company to introduce a new range of roasted chicken strips that has proven highly successful.
The visit also introduced Shalveys to P&H Foods, Ontario with whom they exchanged know-how for the detection and control of listeria and the reduction of pinking in cooked poultry meat. This use of external technical knowledge to solve a business problem could be extended to many businesses across the Irish food market.
However for Shalvey Poultry there were no formal agreements on the technology transfer process in place and Laura feels that both companies may have benefited from a more structured agreement to co-operate.
Online Tools
Jim Cuddy, Manager for Innovation and Technology Transfer at Enterprise Ireland, concluded the Masterclass by re-iterating the supports available for companies eager to explore the technology licensing option.
" www.techsearch.ie is EI's licensing website which provides information and on-line tools to inform the licensing process.
" Technology searches can be performed on-line through the site using a simple keyword process, or companies can contact the TechSearch team for one-to-one assistance.
" Financial supports for licensing and technology acquisition are available through the RTI scheme (for R&D), the Productivity Improvement Fund (for market-ready new products and technologies) and Exploring New Opportunities (for market research and feasibility).